Rally follows BM statement

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SHARES in BM, the construction equipment distributor, staged a modest rally yesterday as the company tried to soothe jangled City nerves, writes Robert Cole.

The price rose 35p to close at 145p, but the company's market value is still barely one-third of that at the start of June.

BM said yesterday: 'The directors are most concerned at the severity of the fall of the company's share price, which they do not believe is justified by the group's trading or financial position.'

BM reaffirmed its intention to pay a dividend for the year to 30 June of 4.4p, 30 per cent up on last time. However, it admitted that 'tough trading conditions', combined with adverse currency movements, may lead to a fall in earnings per share for the year, down from 27.2p for the 12 months to 30 June 1991.

In spite of the statement sentiment about BM remains shaky. One analyst said yesterday: 'The directors have really put their necks on the block. If results to be announced in September do not reflect yesterday's statement they will be in trouble.'

Worries about BM accounting techniques were crystallised with the resignation through ill-health of its high-profile chairman, Roger Shute, a week ago. The shares suffered again earlier this week as City investment analysts reduced their profit expectations.

BM grew rapidly in the 1980s by acquisition and continued in the 1990s with the purchase of Blackwood Hodge and Thomas Robinson, two struggling rivals. Yesterday the new senior management signalled a change of strategy.

Matthew Thorne, chairman, said the company would 'concentrate management resources on further streamlining the organisation and building market share through organic growth'.